Weekend Newsletter

    Posted by matt on 13th of Sep 2020 at 05:45 pm

    will be coming out in the next couple rhs.  I had all my charts finished yesterday but been swamped today with family stuff etc, I just have to record basically. Newsletter will be coming out after futures start trading, which is only 15 min from now

    here's my write up as

    Posted by matt on 13th of Sep 2020 at 06:18 pm

    here's my write up as far as my observations from the newsletter, which I will be recording shortly.

    Also currently ES futures are up 20

    As you know the market has had a nice correction since September started, which first off historically tends to be a weak month. In addition the market was too frothy and moving in a 45 degree or more parabolic move up, which was not sustainable.  The market topped out on Wednesday September 2nd and both Steve and I warned on the previous few days that we were seeing obviously panic type buying and to be careful and have some sort of exit plan.  Incidentally on Wednesday, the day of the highs our SPY reversion to mean system took a rare exhaustion short, which as the name implies is a system that senses when the market is historically very overbought in the short term and due for at least a reversion pullback to the mean.  This particular condition only occurred about 20 times over the last 25 years for example.  

    Also our new SPX 401K KISS system signaled an exit to cash alert on Thursday Sept 3rd once the SPX hit the DVT protective stop at 3490, which so far has been a good call.Our QQQ version of the system also exited on the same day, and as I also showed many of the major high flying stocks also hit their DVT prices such as AAPL, TSLA etc. Eventually we'll be offering a lease program on our KISS charts through Tradestation.comhowever it is not ready yet and I will discuss that briefly in today's newsletter.

    Anyway the market has had a nice two week correction with most of the major indexes and many sector charts and large cap stocks attempting a bounce near their respective 50 day moving averages. This correction has been strongest in the QQQ large cap Technology sector, and this pullback is the largest pullback since the uptrend began in March for the QQQ, thus representing a symmetry break. This symmetry break now places higher adds at the next rally forming some sort of lower high vs going to new highs right away.  For the SPX this pullback too also broke symmetry but only slight. The largest pullback was in June at 267 points which ended up forming a b wave lower high, and this currently pullback is 278 points. On the QQQ's you can see the big difference vs the SPX as the previous largest pullback in the QQQ in June was 18.5 points and this currently pullback about 34!. So quite a difference vs the SPX. 

    What I'm seeing in the short term:

    So regarding the market it's had a nice pullback, however in the short term the pullback did managed a slight oversold bounce mid last week which stalled at the 20 day SMA on the SPX, and 9 EMA on the QQQ before selling back off and making a slightly lower low on Friday.  That said we do have a small zig zag here which could be labeled as a small abc. On the daily chart there is a slight positive divergence on the 5 length RSI and we are near some support from the June highs.  Also on the 60 min time frames the zig zag move last week produced very pronounced MACD divergence and a wedge like pattern, particularly on the SPX.  Therefore I think the market could be at a spot to bounce from and perhaps start some sort of larger B wave up that ultimately forms a lower high before then coming back down in a C or form some other pattern like a complex triangle or double bottom etc, as corrective patterns can take many forms.  That said the SPX has an open gap and large support area around the 3280 are and so it's also possible that price falls further to that zone before attempting a larger really. 

    As far as precious metals they have been in a 1 1/2 month long consolidation after that parabolic blow off move from early August.  Remember what I said back then, price correction and time will be needed before the next major up leg resumes.  Currently gold has formed a tight coil, so it's going to break hard soon one way or another. 

    As far as trade ideas I did not include any from this newsletter however I will look for some later tonight and post them on the trading community blog

    Here's the Weekend Newsletter

    Posted by matt on 13th of Sep 2020 at 08:13 pm

    Here's the Weekend Newsletter

    ES futures now up 35.

    Posted by matt on 13th of Sep 2020 at 10:11 pm

    ES futures now up 35. Remember I was leaning to an upside move

    Matt, do you think it's

    Posted by kevindeng0727 on 14th of Sep 2020 at 09:01 am

    Matt, do you think it's likely to be a breakaway gap?

    good question it could be

    Posted by matt on 14th of Sep 2020 at 09:18 am

    good question it could be via breakout out of the falling wedge pattern.  If so you should be able to tell by price action, price should gap and stay strong, not attempt to pullback and fall back into the wedge

    another thing to watch for would be for a trend day

    Sorry actually I meant a

    Posted by kevindeng0727 on 14th of Sep 2020 at 09:34 am

    Sorry actually I meant a trend day instead of breakaway gap. Thanks for details.


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